Monday Watch

Today's Headlines

Bloomberg:

• China Confident Sanctions Will Bring N. Korea to Table. (video)
• Bond Bears Balk at `Trade of Decade' as Emerging Markets Tested. The case against emerging markets is gaining steam in one corner of the bond world. Investors yanked out $680 million from JPMorgan Chase & Co.’s emerging-market debt exchange-traded fund last month, the biggest-ever flows reversal. Traders are concerned that after an 18-month rally, rising yields in developed markets from the U.S. to Germany could wreak havoc across emerging markets similar to the taper tantrum of 2013, when developing-nation currencies depreciated by about 14 percent and local bonds lost an average of 7.3 percent, according to data compiled by Bloomberg.
• Asian Stocks Gain on U.S. Data; Yen Holds Drop. Asian equities advanced after strong U.S. hiring data on Friday bolstered American stocks. The yen was little changed Monday after sliding by the most in 1 1/2 weeks on Friday. Stocks in Japan, Australia and South Korea gained at the start of trading for the week. The Dow Jones Industrial Average rose on Friday for a ninth straight day to close at a record, while the greenback averted a fourth-straight weekly slide after government figures showed employers added workers at a solid clip and wage growth picked up in July. The S&P 500 Index ended one point below an all-time high to cap a weekly gain, while the Dow’s winning streak is the longest since February. The 10-year Treasury yield rose as the notes pared a weekly advance. Oil trimmed a weekly loss, while gold slumped. Japan’s Topix index rose 0.5 percent, while the S&P/ASX 200 Index in Sydney was up 0.8 percent. South Korea’s Kospi index gained 0.3 percent. Contracts on Hong Kong’s Hang Seng Index were slightly lower. The MSCI Asia-Pacific Index added 0.3 percent.
• Electric Car Boom Drives Rush to Mining's $90 Billion Heartland. A scramble by the lithium market’s biggest players to tie up supply of the high-tech metal is gathering pace in the 170-year-old heartland of Australia’s $90 billion mining industry. Rising Chinese demand for lithium-ion batteries needed for electric vehicles and energy storage is driving significant price gains and an asset boom in Australia, already the world’s largest lithium producer. The fast-developing hub is drawing investment and deals from global producers as well as chemical-to-battery manufacturers in China, the top consumer. 
• Senate Republicans Nod at Bipartisan Push for Insurer Payments. Senate Republicans are expressing a willingness to consider a bipartisan approach to strengthening the individual insurance market under Obamacare, even as President Donald Trump is deciding whether to end payments for it. “We have got a destabilized market where insurance rates are going to go up 20, 30, 40 percent next year,” Tillis of North Carolina said on ABC’s “This Week” on Sunday. “Anything that we can do to prevent that and the damage that that will have on people who need health care I think is something I have to look at.”

Wall Street Journal:

• Hot-Stock Rally Tests the Patience of a Choosy Lot: Value Investors. Value funds around the globe are on track to post their worst performance since before the financial crisis.
• Congressional Recess, Full Plate Keep the Heat on GOP Lawmakers. Pressure from constituents over health care could make it hard to focus on a tax overhaul.
• North Korea Shrugs Off Sanctions Despite China’s Push to End Missile Tests. U.S. lauds China for supporting latest U.N. sanctions, but Pyongyang has no plans to change.
• Big Tobacco’s Next Big Thing? Tobacco. Unlike e-cigarettes, new heat-not-burn products heat tobacco instead of a nicotine concoction.
• The Problem With Electric Cars? Not Enough Chargers. To hit its sales targets, Tesla has to sell 430,000 cars by the end of 2018 and 10,000 a week after that—but where are they all going to plug in?
• What Is Harvard Hiding? Evidence of bias against Asian-Americans deserves legal scrutiny.

MarketWatch.com: 

• De Blasio wants to tax wealthy New Yorkers to fund transit.

Barron's:

• Had bullish commentary on (DIS), (DAL), (SO), (VOYA), (HSBC), (CBS), (FOX) and (CMCSA). 
• Had bearish commentary on (CMG).

Fox News: 

• Asia-Pacific regional disputes impede united stand on North Korea. (video)
• Rosenstein, Christie temper reports of Mueller grand jury in Russia probe. (video)

CNBC:

• There's a house full of cryptocurrency gurus in San Francisco, and it's like a modern-day commune. (video)
• Why Apple(AAPL) is experiencing another growth spurt.

Zero Hedge:

• Silicon Valley "Outraged" After Google(GOOGL) Employee Pens Viral Doc Slamming "Anti-Conservative" Culture.
• China's Minsky Moment Is Imminent.
• Rare Earths Are China's Most Potent Weapon In A Trade War.
• The Madness Is Back: Homeowners Take Out Mortgages To Buy Bitcoin, Cars And Wine.
• Mysterious Trader With "Nearly Unlimited Bankroll" Said To Manipulate, Dominate Price Of Bitcoin.
• Illinois Makes "Barack Obama Day" State Holiday.
• More Lonely, Fewer 'Friends', Less Sex - Have Smartphones Destroyed A Generation? (graph)
• Morgan Stanley Asks At What Point Will EURUSD "Breathlessness Turn Into Outright Altitude Sickness". (graph)
• Venezuela Claims It "Crushed" A Military Rebellion.
• California Has 11 Counties With More Registered Voters Than Voting-Age Citizens.
• "How Do We Get To The Next Crisis": An Interview With Raoul Pal And Julian Brigden.

Business Insider:

• The North Korea sanctions were an 'appropriate response' according to China's foreign minister.
• Inside the world of Silicon Valley's 'coasters' — the millionaire engineers who get paid gobs of money and barely work.

Washington Post:

• Under Trump, gains against ISIS have ‘dramatically accelerated’. Nearly a third of territory reclaimed from the Islamic State in Iraq and Syria since 2014 has been won in the past six months, due to new policies adopted by the Trump administration, a senior State Department official said Friday. Brett McGurk, the State Department’s senior envoy to the anti-Islamic State coalition, said that steps President Trump has taken, including delegating decision-making authority down from the White House to commanders in the field, have “dramatically accelerated” gains against the militants.
  

Night Trading

• Asian indices are unch. to +.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 80.0 unch.
• Asia Pacific Sovereign CDS Index 18.75 unch.
• Bloomberg Emerging Markets Currency Index 73.79 +.03%.
• S&P 500 futures +.17%.
• NASDAQ 100 futures +.25%.

Morning Preview Links

Earnings of Note

Company/Estimate

• (BAH)/.47
• (FDC)/.40
• (IIVI)/.35
• (TSN)/1.20
• (CAR)/.54
• (CBS)/.97
• (MAR)/1.02
• (THC)/-.18

Economic Releases 
3:00 pm EST

• Consumer Credit for June is estimated to fall to $16.0B versus $18.41B in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Kashkari speaking, Japan Trade Balance report, Jefferies Industrials Conference, Cowen Communications/Infra Summit and the (BWA) investor day could also impact trading today.

BOTTOM LINE: Asian indices are modestly higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.